If you have been following the fantasy sports news, you know that this multi-billion dollar industry is facing some interesting times. With the rise of DraftKings and Fan Duel, questions about these organizations being gambling entities are being asked across state and federal governments.
And the money continues to roll in.
At least, it was. It is now being reported that ESPN and DraftKings have ended their exclusive advertising deal. The reports from DeadSpin and Yahoo indicate that it was DraftKings that approached ESPN to end the agreement, possibly for the company to free up some cash. DraftKings was facing multiple lawsuits, so with the legal fees and possible settlements, DraftKings may need all the resources possible in order to stay afloat.
The report also notes how Disney, ESPN's parent company, initially agreed to invest millions into DraftKings, but then declined.
When businesses start looking to cut advertising spending, it is usually the start towards an uncomfortable decline. Like we've talked about in the past, businesses cut advertising to either weather a storm or readjust costs. Neither situation indicates a phase in growth.
We will see where this takes DraftKings and businesses like it, but if we were setting up our fantasy roster, we sit DraftKings on the bench for the foreseeable future.
Dwayne W. Waite Jr. is partner and principal at JDW: The Charlotte Agency, a marketing and advertising shop in Charlotte, NC. He enjoys consumer behavior, economics, and football.
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